I have just finished reading a fascinating symposium of papers on America’s sovereign debt crisis published in the most recent Econ Journal Watch (volume 9, number 1: January 2012). It is introduced by Tyler Cowen, and includes short papers by Jeffrey Rogers Hummel, Garett Jones, Arnold Kling, Joseph Minarik, and Peter Wallinson.

It is fascinating, if sobering. I am among those who believe the debt matters—indeed, that it may soon become the only issue that matters, because it will cripple our ability to handle any other issue. If you care about national defense, health care, education, investment in “green” energy, or anything else, beware: the ever-larger portion of our wealth that will need to go to paying interest on our debt, and of course the entitlements of Social Security, Medicare, and Medicaid, will mean that there is ever-less wealth available for anything else.

(By contrast, some, like Paul Krugman, argue that the debt is not as big an issue as I believe it to be, but I have a harder and harder time believing that position has credibility. Scott Winship has a point when he argues in National Affairs that we often exaggerate the economic “bogeymen” we face, but the national debt is one bogeyman he rather conspicuously leaves out of his discussion.)

So, back to the EJW symposium. I highly recommend reading it, sharing, as I do, the editors’ “hope that it’s not too late for them to make a difference” (22). I will not attempt reproduce their arguments and data, but I will offer a handful of short reflections that might whet your appetite for the papers themselves.

1. One thing the contributors seem to agree on is that there is only a handful of possible ways we might address the impending fiscal crisis. As Jones puts it, “There are four possible tools: Higher revenues, lower spending, inflation, and default” (41). But it strikes me that there is at least one other possible way we might address the potential crisis, a possibility that none of the contributors mentions: imperialism. By that I mean that we might start invading other lands, territories, and countries, and simply appropriating their assets. There is certainly ample historical precedent. I do not think we should discount the potential attraction of large-scale theft and confiscation as a method of financing our debts and the lifestyles to which we have become accustomed.

2. There is some disagreement about how likely default is. Jones, for example, argues it is relatively unlikely; Kling argues it is relatively more likely. I would be interested to hear how Jones and Kling might respond to one another, but, beyond that, another striking feature of the discussion is the astonishing degree to which they seem to agree that no one really knows. We are in uncharted territory here. The prospect of the largest wealth-producing nation in the entire history of humankind, whose economy has huge and deep ramifications in the rest of the world’s economies, facing the prospect of being unable to service the largest amount of debt that any nation has ever produced in the history of humankind—well, who knows? Kling writes, “much of what I will be discussing is outside the competence of . . . well, anybody, making the exercise highly speculative” (51; ellipsis in the original). Perhaps this fact contributes to the reason Tyler Cowen writes, in his introduction to the symposium, “Our times are now truly scary” (21). Indeed.

3. Finally, I wish there had been more discussion of possible solutions. The contributors seem to agree both that we are facing a desperate situation and that, nevertheless, we can avoid catastrophe if we act quickly. They offer various reasons for being pessimistic that solutions will actually be forthcoming (see particularly Minarek’s and Wallinson’s contributions), but perhaps recommendations about positive steps that might actually help, along with some discussion of how these steps might be feasible, would be helpful. Diagnosing the true extent of the sclerosis is, of course, the first step; but recommended courses of treatment are the next step.

At Salon.com, Andrew Leonard criticizes the report under the sarcastic headline, “Why do liberals hate freedom so much?” Because the Mercatus Center, which sponsored the research that led to the report, has received funding from the Koch Foundation, by a long chain of guilt-by-association reasoning, Leonard implies that the intent of the report is not really to gather and present data that provide an objective, quantifiable measure of both economic and personal freedom in each state, but is rather simply to bash liberals. A rather egocentric view of the world, that.

Of course, even if Leonard’s insinuations were true, that the study were part of Charles and David Koch’s nefarious plot to, well, extend economic and personal freedom, that fact would have no bearing on whether its findings were true. Attacking an author, or an author’s (alleged) motives, does not defeat the author’s argument. Philosophy 101: the ad hominem fallacy is . . . a fallacy.

But Leonard raises two other objections. The first:

[According to the report,] Most Americans are not free. A telling example: In the Mercatus rankings the two states blessed by the highest freedom quotient boast a combined population of a little over 2 million—South Dakota and New Hampshire (the latter of which, admittedly, went for Obama in 2008). The bottom three states were New York, New Jersey and California, which have a combined population of over 65 million.

Sixty-five million Americans in just three states cower under a totalitarian shadow! That’s a little distressing!

(Why “admittedly”? Is Leonard aiming to provide analysis, or advocacy? But that is by the by.)

As analysis, this is quite weak. Sorens and his co-author William Ruger claim that there are real differences between the least “free” and most “free” states in their report, but they do not claim that even residents of the, by their measure, “least free” state, New York, face anything like what people in, say, North Korea face. Although there are real relative differences among the states, no place in America is under a “totalitarian shadow.” To say otherwise is just moral posturing.

More substantively, however, one need not believe that their conception of economic and personal “freedom” is the only or the best one. They provide an explicit definition of their terms; they provide explanations and justifications for the metrics they use; and their data are openly available. If they make an error in their math or their reasoning, that should be simple enough to discover and point out. Leonard does not do that.

Leonard apparently wants to define “freedom” differently. Fair enough. He unfortunately is not as explicit about his own preferred definition as Sorens and Ruger are. Yet Leonard does, perhaps inadvertantly, disclose a clue about what his definition of freedom would be. He writes:

But from my perspective, not having access to universal healthcare is an imposition on my freedom. The fact that for most Americans healthcare is tied to one’s employer is a dread shackle limiting the freedom of movement of every worker. How much more liberated would we all be if we could switch jobs or work for ourselves without the fear that at any moment we might be crippled by an exorbitantly expensive health emergency? Similarly, a state requirement that employers offer paid parental leave (another black mark against California) clearly frees me to be a better father to my newborn. I’d really love to see what would happen to internal migration patterns in the United States if all the big blue states had universal single-payer healthcare, while everyone else was left at the mercy of a completely unregulated private market. That civil war would end rather quickly, I suspect. [Leonard’s emphasis]

So his objection is that Sorens and Ruger do not consider the enjoyment of government-provided health care as an element of freedom, along with government-mandated (paid, presumably) parental leave from work. How much freer would Leonard be if he did not have to pay for his own health care? How much freer would he be if he did not have to work to support his family, but could instead simply spend time with his family?

How much freer indeed. The life Leonard wants for himself has its attractions. It is the life of an old-fashioned aristocrat, of a manorly lord. Leonard has the freedom of leisure to be a gentleman, pursuing properly gentlemanly ends—not the ignominious and base life of a man who has to actually work to support himself in the lifestyle he chooses.

Now, Leonard has the feigned greatness of soul to allow that he would like this life of gentlemanly leisure for “all” of us. But that is dishonesty. He knows as well as anyone that we cannot all be leisured gentlemen. Someone will actually have to labor to provide the goods and services off which the gentlemen will live. Who are those people making his life free? Who are the people providing him his health care, paying his bills while he takes time off to romp with the kids, bearing the costs generated by his insousciant skipping from one activity to the next as he follows his bliss?

And now we see the real import of the “freedom” Leonard wants. It is the freedom of the pharaoh: the serfs, whom I never deign to see and whom I never condescend to consider, will labor to provide me the comforts and enjoyments and leisure I require. I am not held responsible for them—that would be beneath me.

I believe that is not only a loathsome attitude, but it is a morally reprehensible position. Mr. Leonard, you have no right to live off the fruits of others’ labor. Yes, it would increase your freedom if you could command others to work for you, but yours is a moral code that entitles one group of people to live at the expense of unwilling others, that requires one group of people to be held responsible for the leisurely lifestyle of another, that treats one group as superior to others and fails to respect the inherent dignity of the members of the other group as independent moral agents and indeed as fully human.

Realizing that we are not entitled to others’ labor, and that we are ourselves responsible for the choices—and the consequences of the choices—that we make is bracing and can be, depending on where our moral heads were to begin with, startling. But it is the only way to respect human dignity, both in ourselves and in others. And it implies the only freedom worth the name.

The Heritage Foundation has put together a short video of interviews with a handful of people in Wisconsin who are protesting Governor Walker’s proposed “budget repair bill.” The video opens with a person saying, “What did Hitler do first? He busted the unions. First you take away the unions, and then you take away the Jews.” Near the end of the video, another person says that the current state of Wisconsin is “like pre-Nazi Germany.” Well.

The final person in the video says that she does not want Walt Disney and Wal-Mart teaching our kids, which is what she apparently thinks will happen if the Wisconsin governor succeeds in reducing Wisconsin teachers’ legal rights to bargain collectively. It is hard not to wonder whether even the rather ahistorical Walt Disney corporation would do any worse, but that is by the by.

In the circumstances, I have a recommendation to make to Wisconsin’s Governor Walker, and by implication to other governors and state legislatures around the country who are or will be facing similar budget deficits and debts and are or will have to figure out ways to address them: Go for the jugular now.

The proposed budget in Wisconsin would increase public employees’ contribution to their own pensions to approximately 6% and their contribution toward their own health care benefits to approximately 12%—both numbers still well below state and national averages for the private sector.

Their reason for protesting is, they say, not the money, but the fact that the governor wants to “bust the unions.” According to the Milwaukee Journal Sentinel, “Under the bill, the unions could not bargain over anything but wages, would have to hold annual elections to keep their organizations intact and would lose the ability to have union dues deducted from state paychecks. Employees would no longer have to automatically pay union dues, but could choose whether they want to do so.”

That is not quite “busting the unions.” Under Walker’s proposed legislation, union members would still be able to exist and would still be able to bargain collectively about wages. But they would have to hold annual elections, and they couldn’t have their union dues automatically drafted from their paychecks—hardly objectionable, it would seem, let alone worthy of such aggressive protest. They would lose their ability to bargain collectively about their pensions and health benefits, yet even here it is not as drastic as it initially sounds: police, firefighters, and state troopers would all be exempt and thus allowed to continue bargaining collectively about everything.

But the union members and their allies are nevertheless willing to employ the reductio ad hitlerum, even for such a relatively small fiscal change. The right-leaning Media Research Center has a story (with pictures and a link to video) about the climate of hate that protesters are creating with references to Hitler, the Nazis, Mussolini, and Mubarek, as well as pictures of the governor in crosshairs and other eliminationist rhetoric.

I don’t think public-sector employees should be allowed to collectively bargain or unionize at all, because the people paying their salaries and benefits have no place at the bargaining table and because conflicts of interest are everywhere. (For example, the former governor of New Jersey used to date a former state union boss.) But when public-sector employees average better pay, better retirement plans, better health, sickness, leave, and vacation plans, and better job security than their counterparts in the private sector, then they have lost the moral high ground and have become instead mere special pleaders for their special privileges.

In circumstances like these, one does not begin the negotiations with them with such small requests. As long as you’re going to be called a Hitler anyway, then why not begin the negotiations with something rather more real-world-like? Why not start with proposing to outlaw altogether unionizing and collective bargaining among public workers, and requiring them to pay 50% of their pensions and benefits?

For too long many of them have been living in an economic fairytale land, where more money comes from “demanding” it, not from inceasing marginal productivity and wealth. If we had all the money in the world, I would still say it is not healthy for so many people not to understand the necessities of wealth production (not distribution), and the realities of what people in the private sector face. But we don’t have all the money in the world.

So I say to Governor Walker, do not merely wait them out; proceed all the more boldly against them. If they are already calling you a Hitler, and thus already dealing with you in bad faith, what more do you have to fear?

Like this:

Last week an astronomer claimed that the earth’s precession required a reevaluation of the zodiacal chart. His announcement created a firestorm, leading to stories of worry and even panic in all the major news outlets in America. It was initially shocking to see just how many people were discomfitted by this news, to see just how many people apparently believe that their zodiacal sign has some actual bearing on their lives. But then one realizes this should not be so surprising, since we are and remain a superstitious species.

One thing that disqualifies astrology from being a science is precisely its lack of causal regularity. There are no laws of astrological causation, no claims that if this happens, then that will always follow. No astrological claim has any predictive force; they are too vague and unspecific for actual evaluation. And they are unfalsifiable, meaning that it is impossible to tell—again usually because they are so vague—under what conditions they could be false.

So why do people continue to listen to astrologers? Why do they read their (vague, unspecific, unfalsifiable, and therefore unscientific) horoscopes? One would like to think it is for entertainment purposes only, the way one will watch and be entertained by a play, even though one knows the actors are only, well, acting. But the sensation caused by the news of changes in zodiac signs suggests that many people put far more stock in astrology than as mere entertainment. Humans are, after all, seekers after patterns: We see two or three data points, and we leap to fill in the causal gaps, creating a narrative that is comforting and reassuring for its completeness and its integration into what we already know or believe. And once we have discovered—that is to say, invented—a causal pattern, we are loath to give it up. All future data points, consistent or not with the received pattern, we accept, ignore, or twist, as the case may be, so that they seem to comport with our story.

It is not news that humans do this, even if it is dispiriting that, amidst all our education and enlightenment today, we still seem just as susceptible to astrological explanations as the ancient Greeks were.

Consider the recent case of the Arizona shooting. The blood had hardly been spilt before some were inventing their astrological explanation of the event. The stars were aligned just so (there was a “climate of hate“), the moon and the planets were in the proper position (Sarah Palin had done x, the Tea Party had done y), the proper incantations had been sung (the Constitution was read aloud), the proper dolls were pricked (ObamaCare was threatened), and thus the proper demons called forth (and there is more violence in the offing). Given all this, the shooter apparently had almost no choice to do what he did and thus can hardly be held responsible. The stars, the planets, the incanations, made it inevitable.

Of course, it is not impossible that the Arizona shooter did what he did because of Sarah Palin, “eliminationist rhetoric,” and so on. We do not know why he did what he did, so we cannot rule that out. On the other hand, because we do not know why he did what he did, we . . . do not know why he did what he did.

The fact that so many, despite this yawning gap in the causal account, claimed to know why he did it, suggests that astrological thinking remains with us. We do not know whether the shooter in this instance listened to Sarah Palin et al., we do not know whether he sympathized with the Tea Party, and we do not know whether he cared about ObamaCare; even if he did listen to Palin, was a Tea Party sympathizer, and cared about ObamaCare, none of that would yet prove that those were in his mind when he conceived of, planned, and then took his actions; and even if they were in his mind, that still would not yet mean that he was not himself responsible for his actions. An awful lot remains yet to be shown, then, before we could reasonably come to that conclusion.

One commentator pauses to consider the implications of the fact that the pervasive astrological explanation of the Arizona shooter’s action actually contains no causal account. But the pause is only initial, because he claims that “causal responsibility is not the core issue here. Rather, moral responsibility is” (emphasis in the original). His argument is that even if the “vitriol” in our public political discourse had no causal effect in this case, it does not mean we should not be held morally responsible when we say “grossly irresponsible, terribly immoral, unacceptably impermissible” things. Yes, indeed. But actual (not moral) causality is precisely what is at issue here, because people are laying blame for the event at the feet of people and events other than the shooter himself.

Yet another commentator argues that we should not have “physics envy” in our attempt to explain why the shooter did what he did. He responds to the objection that no “direct causation” has been shown between the metaphorically violent rhetoric and the actually violent action by calling this “an impossible standard of proof.” He has a point. Human beings are complex creatures, and it is very difficult—even, perhaps, impossible—to give the exact chain of causality that led to any given action of any given person.

But we must admit that we are a very, very long way away from such an account. All that has been offered so far is a just-so story about what kinds of things might have played a role, what kinds of words and rhetoric might have affected him, in what way such things might have affected him, and so on. But just-so stories are not scientific, because not causal, explanations. They are not even serious attempts at scientific explanations. They are just stories.

The event at issue here is a multiple murder—a gravely serious affair. If it has demonstrated just how apt we are to leap to unsubstantiated narratives fitting our prior expectations, it then also demonstrates how important it is to slow down and make sure we get things right. Let us find who the responsible parties actually are—not who they might be—and let us hold them accountable. We might not need an account of causation that would satisfy the physicist, but a murder conviction requires a higher standard of proof than stories.

Astrological accounts of human behavior, however appealing or entertaining they can be, do not contribute to our understanding of human behavior, but instead to our prejudices about it. We must not allow them to determine our judgments in this or any other important actual case.

Like this:

[Author’s note: Although I wrote it before the election, I embargoed this essay until today, lest anyone think I was advocating for a political party or for an electoral victory. The sentiments expressed below are unrelated to any partisan agenda.]

Billionaire businessmen and philanthropists Charles and David Koch have come in for a lot of criticism lately, and in all the best places: among others, in The New York Times (both Paul Krugman and Frank Rich), in New York Magazine, and in an improbably long piece in the The New Yorker. The charges in all the accounts are the same. The Kochs are “covert” bankrollers of the Tea Party, shadowy “tycoons” funding a relentless campaign to discredit President Obama and his policies, and, more generally, financial supporters of numerous initiatives whose real goals are to help them line their pockets—all either in secret or behind a false mask of charity and patriotic rhetoric. According to critics, when the Kochs talk about “individual liberty” and “free markets,” what they really mean is “get the government off our backs so we can make even more money.” And people supported by the Kochs who espouse similar notions are just puppets pulled by the strings of the Kochs’ billions.

As someone whose work has sometimes been supported by the Koch Foundation, the criticisms directed at the Kochs are thus also directed at me, as they are at the other professors, students, academic institutions, charitable organizations, and others that have benefitted from the Kochs’ giving over the years. If the Kochs really are this bad, however, am I required, in good conscience, to abjure any and all connection to them?

Luckily I don’t have to answer that question: The charges are in almost all cases either false or grossly misleading. They may fit a narrative typical of a Hollywood movie, where evil rich businessmen connive to manipulate others for their own benefit, but conspiracy theories like those rarely match reality. The Kochs themselves have responded to the various allegations, but there are at least two clear reasons why the allegations must be either false or misleading.

The first relates to the Tea Party movement. Attending a Tea Party rally or listening to people sympathetic to the movement, one cannot help but be struck not just by how articulate they are, but how genuine. They mean what they say, and conviction like that simply cannot be bought. By contrast, paying people to claim they believe things that they really don’t is a rather dicey affair: It is almost always transparent, and mercenary offers like that appeal to only a small number of people in any case. But the Tea Party phenomenon is astonishing precisely because it is not orchestrated from the top. Indeed, its decentralized, bottom-up character is one of the keys to its success. The hundreds of thousands of people who have attended rallies nationwide have done so because they have sincere beliefs on which they decided to act.

The second reason that charges against the Kochs are false or misleading relates to their alleged influence in higher education. The Kochs have given millions of dollars over several decades supporting students, professors, academic institutions, and nonprofits that are either sympathetic to their worldview or at least willing to give it a fair hearing. Yet what proportion of professors today subscribe to the Kochs’ view? Less than one-tenth; probably more like one in twenty. How could this be, if the clandestine reach of the “Kochtopus” is so far and wide?

Consider what they are up against. According to the New Yorker article, Charles and David Koch “have given over one hundred million dollars to right-wing causes” since 1980. That sounds like a lot, but it averages only about $3.5 million per year. Generously adjusting for inflation, assume it is the equivalent today of even $10 million per year. That is enough to pay the full salary and benefits of perhaps seventy professors in the country per year. That would be seventy out of some 1.7 million, or a vanishingly small .004%.

Considering, moreover, the substantial predominance of left-leaning political and economic worldviews on today’s campuses, one begins to see why the money the Kochs are donating hardly warrants the hyperventilating rhetoric it is receiving. For better or worse, theirs is a small minority view on college and university campuses, and the money they give is dwarfed by the resources that left-leaning faculty, centers, programs, and institutions regularly devote to discrediting positions like theirs and to advocating contrary views.

But putting aside money and numbers, what of the Kochs’ ideas themselves? The Kochs support limited government, free markets, protections of private property, individual liberty, and peace. This is approximately the political-economic vision of America’s founders. Perhaps that is a “radical” view in the minds of an average New York Times columnist, but it still resonates with many Americans who understand that that vision has enabled more freedom and prosperity for the average person than any other system of political economy ever tried. It is moreover an inspiring moral vision: human beings as unique and possessing a dignity that requires both individual freedom and personal responsibility, and a system of social institutions that leads to prosperity and peace.

These are the ideas that are so ominous and threatening?

Charles and David Koch are those rare specimens who take their convictions seriously enough to put their own money where their mouths are. One might in the end disagree with their vision, but for standing up for what they believe, and for being willing to shoulder their part of the burden of maintaining a free society, I say they should be not vilified but applauded.

Whenever I’m at a loss for blog material, I can just check out the latest Krugman column. This Sunday’s pleasure was entitled “1938 in 2010,” and I’ll just quote the silliest bit:

From an economic point of view World War II was, above all, a burst of deficit-financed government spending, on a scale that would never have been approved otherwise… But guess what? Deficit spending created an economic boom — and the boom laid the foundation for long-run prosperity.

But the GDP figures during World War II were essentially made up, being based substantially on administratively determined “prices.” It turns out that Americans’ living standards were at best flat during the war (and that’s not counting the soldiers, of course). Someone, please let Dr. Krugman know about Robert Higgs’ research (here and here).

UPDATE: The myth of World War 2’s economic benefits is of course bipartisan, as evidenced in today’s vituperative post on rightist site Redstate.com.

Like this:

Here is the reason why a subscription to the WSJ is worth the money: because they run pieces by people like John Cochrane. I’ve been trying to make sense of the Greece mess, but I was missing the key. Here it is:

Letting someone lose money on sovereign debt is the acid test for the euro. If not now, when? It won’t happen in good times, nor to a smaller country. The sooner the EU commits, and other countries and their lenders come to terms with the fact that they will not be bailed out, the better.

The current course—ever-larger and less-credible bailout promises, angry German voters who may vitiate those promises, vague additional fiscal supervision (i.e. more of what just failed miserably)—is not the answer.

The only way to solve the underlying euro-zone fiscal mess (and our own) is to slash government spending and to focus on growth. Countries only pay off debts by growing out of them. And no, growth does not come from spending, especially on generous pensions and padded government payrolls. Greece’s spending over 50% of GDP did not result in robust growth and full coffers. At least the looming worldwide sovereign debt crisis is heaving “fiscal stimulus” on the ash heap of bad ideas.

I’m pre-disposed to like Cochrane because he was a terrific teacher of mine (though I was a terrible student) and a super nice guy, but mostly I like him because he nits the nail on the head: as a currency the Euro is a great idea, but the problem is that the EU can’t decide whether it is going to be a fiscal union in addition to a monetary union, so the bond holders aren’t being required to take the hit they legitimately deserve (and need) to take for investing in Greece in the first place.

A comparison between Cochrane’s arguments and those of Paul Krugman would be interesting. But getting past the “Republicans are soooo evil” nonsense to find the actual economics is too annoying for a late night.

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Pileus is a group of scholars who examine public policy and philosophy in light of our respective disciplines. We differ in many ways but share a commitment to liberty and personal responsibility.

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